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Peter Roskam Addresses Expiring Tax Benefits in Agenda Article

ADventures in Law

Complying with the Mail Order Rule and Satisfaction Guarantees: Poor Customer Service Can Cost Millions

2024 DSIR Report Deeper Dive

2024 DSIR Deeper Dive: Preserving Ephemeral Messaging – Capture Data Before Its Ghosts Haunt Your Compliance

Carlos Ramos-Mrosovsky, Paul Levine Contribute Article to Transatlantic Law Journal

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<a href="#new">New Crypto Products Announced, Stablecoin and BTC Data Published</a>

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<a href="#trends">Reports Provide New Data on Crypto Market Trends</a>

<a href="#avalanche">Avalanche Used for DMV Titles, Papers Address Web3 Identity, Smart Contracts</a>

<a href="#swiss">Swiss FINMA Publishes Stablecoin Guidance; BIS Announces Stablecoin Project</a>

<a href="#doj">DOJ, SEC Actions Target Crypto Fraud; UK FCA Targets Crypto AML Violations</a>

<a href="#reports">Reports Cite Ongoing Threat of Crypto Hacks</a>

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New Crypto Products Announced, Stablecoin and BTC Data Published

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By <a href="https://www.bakerlaw.com/KeithRMurphy">Keith R. Murphy</a>

According to a recent press release, OpenEden, a tokenization platform, announced that it is bringing tokenized U.S. Treasury bills to the XRP ledger. The assets backing the platform’s TBILL tokens are reportedly invested in short-dated U.S. T-bills and reverse repurchase agreements collateralized by U.S. Treasurys.

In related news, the Aptos Foundation recently announced the launch of Ondo U.S. Dollar Yield (USDY), Ondo Finance’s yield-bearing stablecoin, according to a recent report. USDY reportedly will be backed by U.S. Treasurys and will be available for non-U.S. citizens using the Aptos blockchain.

In other news, the market capitalization of stablecoins increased by 2.1 percent to $164 billion in July, according to a recent report. The USDC stablecoin reportedly experienced a spike in trading in July as a result of a surge in market inflows and new European rules for digital assets, with trading volumes for USDC pairs on centralized exchanges reaching $135 billion as of July 25, according to the report. USDT, which has the largest market share among stablecoins at 70 percent, posted a record 11 consecutive months of increased market capitalization, to $114 billion, as noted in the report.

According to a recent report, the United States government holds more than 183,000 bitcoin (BTC), with a current value of approximately $12 billion, which makes it the largest geopolitical owner of BTC. In related news, Sen. Cynthia Lummis recently published a press release announcing a bill that would establish “a strategic Bitcoin reserve to serve as an additional store of value to bolster America’s balance sheet and ensure the transparent management of Bitcoin holdings of the federal government.”

For more information, please refer to the following links:

<a href="https://ripple.com/ripple-press/openeden-introduces-tokenized-us-treasury-bills-onto-the-xrp-ledger/?utm_campaign=" target="_blank" rel="noreferrer noopener">OpenEden Introduces Tokenized US Treasury Bills onto the XRP Ledger</a>

<a href="https://cointelegraph.com/news/yield-bearing-treasury-backed-stablecoin-usdy-aptos" target="_blank" rel="noreferrer noopener">Yield-bearing Treasury-backed stablecoin USDY launches on Aptos</a>

<a href="https://cointelegraph.com/news/usdc-trading-volume-soars-july-mica-market-growth" target="_blank" rel="noreferrer noopener">USDC trading volume soars 48% in July, driven by MiCA, market growth</a>

<a href="https://cointelegraph.com/news/united-states-government-12b-bitcoin-arkham-intelligence" target="_blank" rel="noreferrer noopener">United States government holds $12B in Bitcoin — Arkham Intelligence</a>

<a href="https://www.lummis.senate.gov/press-releases/lummis-introduces-strategic-bitcoin-reserve-legislation/" target="_blank" rel="noreferrer noopener">LUMMIS INTRODUCES STRATEGIC BITCOIN RESERVE LEGISLATION</a>

Reports Provide New Data on Crypto Market Trends

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

Recent reports provide new data on various aspects of the crypto markets. A major U.S. cryptocurrency exchange recently published its Q3 2024 Guide to Crypto Markets report. Among other things, the report provides data on crypto market indicators, explores how bitcoin (BTC) and ether (ETH) exchange-traded funds have altered the crypto market landscape, and provides detailed analysis of the BTC and ETH markets. Another recently published report by the same exchange provides new data and metrics that analyze growth and trends among digital assets on Ethereum Virtual Machine (EVM) compatible blockchain networks. A third recent report, published by Architect Partners, provides data and analysis of crypto market M&A and financing activity in Q2 2024. And a fourth report provides key metrics from Q2 2024 on 10 “smart contract platforms,” including Ethereum, Solana, Polygon, Optimism, Blast, BNB Chain, Avalanche, Arbitrum, zkSync Era and Base.

<a href="https://www.coinbase.com/institutional/research-insights/research/market-intelligence/q2-2024-guide-to-crypto-markets" target="_blank" rel="noreferrer noopener">Guide to Crypto Markets - Q3 2024</a>

<a href="https://www.coinbase.com/institutional/research-insights/research/market-intelligence/measures-of-adoption-in-the-evm" target="_blank" rel="noreferrer noopener">Coinbase: Measures of Adoption in the EVM</a>

<a href="https://architectpartners.com/q2-2024-crypto-ma-and-financing-report/" target="_blank" rel="noreferrer noopener">Q2 2024 Crypto M&A and Financing Report</a>

<a href="https:/messari.io/report-pdf/e7d6d4e88d58290a4f3423d4c0dc2d006781c9c4.pdf">Messari: State of Smart Contract Platforms</a>

Avalanche Used for DMV Titles, Papers Address Web3 Identity, Smart Contracts

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

According to a recent press release, Oxhead Alpha, a blockchain development company, announced “a large-scale implementation for California’s Department of Motor Vehicles (DMV) on Avalanche, successfully digitizing 42 million car titles as part of an ongoing effort by the state to modernize the title transfer process for California drivers and DMV representatives.” According to the press release, the digital titles “will soon be claimable by vehicle owners through the DMV’s secure mobile wallet app,” and “escrow-like Avalanche blockchain smart contracts mediating the title transfer will allow consumers to track and manage their pink slip vehicle titles digitally, cutting down on trips to the DMV and post office.”

In other news, the blockchain development arm of a major U.S. bank recently launched a series of articles on Web3 digital identity. The series will explore how “digital identity in Web3 will empower individuals and entities to own, control and share their identity data” and “enable new use cases that empower greater self-expression and verification.”

In a final notable item, a recently published paper analyzes “the state of the art in machine-learning vulnerability detection for Ethereum smart contracts, by categorizing existing tools and methodologies, evaluating them, and highlighting their limitations.” Among other findings, the paper discusses “best practices to enhance the accuracy, scope, and efficiency of vulnerability detection in smart contracts.”

<a href="https://www.avax.network/blog/california-dmv-makes-history-digitizes-42-million-car-titles-on-avalanche-blockchain" target="_blank" rel="noreferrer noopener">California DMV Makes History, Digitizes 42 Million Car Titles on Avalanche Blockchain</a>

<a href="https://www.jpmorgan.com/onyx/content-hub/digital-identity-in-web3#learnMore" target="_blank" rel="noreferrer noopener">Onyx: Digital identity in Web3</a>

<a href="https://arxiv.org/abs/2407.18639" target="_blank" rel="noreferrer noopener">Vulnerability Detection in Ethereum Smart Contracts via Machine Learning: A Qualitative Analysis</a>

Swiss FINMA Publishes Stablecoin Guidance; BIS Announces Stablecoin Project

By <a href="https://www.bakerlaw.com/ChristopherLamb">Christopher Lamb</a>

According to a recent press release, the Swiss Financial Market Supervisory Authority (FINMA) has published guidance on the issuance of stablecoins. Among other things, the guidance addresses the legal classification of stablecoins, anti-money laundering regulations and banking requirements including requirements for default guarantees and associated risks. According to the release, the guidance “provides information on aspects of financial market law that arise in relation to stablecoin projects” and discusses the heightened risk of “money laundering, terrorist financing and the circumvention of sanctions.” These areas of risk, the release notes, present “reputational risks for the Swiss financial centre as a whole.”

A recent press release by the Bank for International Settlements (BIS) announced a new joint project, Project Pyxtrial, between the BIS Innovation Hub and the Bank of England to explore technology solutions that enable the monitoring of asset-backed stablecoins’ balance sheets. According to the press release, the project is developing a prototype data analytics pipeline to support supervision by providing near-real-time data about stablecoins’ liabilities and their backing assets.

<a href="https://www.finma.ch/en/news/2024/07/20240726-m-am-06-24-stablecoins/" target="_blank" rel="noreferrer noopener">FINMA publishes guidance on stablecoins</a>

<a href="https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/4dokumentation/finma-aufsichtsmitteilungen/20240726-finma-aufsichtsmitteilung-06-2024.pdf?sc_lang=en&hash=03D675C1247EAFAE0C391363A2F18B9A" target="_blank" rel="noreferrer noopener">FINMA Guidance 06/2024 Stablecoins: risks and challenges for issuers of stablecoins and banks providing guarantees</a>

<a href="https://www.bis.org/about/bisih/topics/suptech_regtech/pyxtrial.htm" target="_blank" rel="noreferrer noopener">BIS: Project Pyxtrial: monitoring the backing of stablecoins</a>

DOJ, SEC Actions Target Crypto Fraud; UK FCA Targets Crypto AML Violations

A recent press release by the U.S. Department of Justice (DOJ) announced that the founder and promoter of the “BitClout” token has been arrested and charged with “defrauding a ‘BitClout’ purchaser by making false and misleading representations disclaiming control over the use of the investment funds.” According to the press release, BitClout is “a social media and cryptocurrency trading platform that purportedly allowed users to purchase BitClout tokens using Bitcoin, ostensibly through a decentralized protocol without any centralized issuer, for the purpose of trading BitClout tokens in connection with the social media profiles of other BitClout users.” The press release notes that the defendant “allegedly lied to investors and misappropriated investments in the protocol for personal expenses and gifts.”

The U.S. Securities and Exchange Commission (SEC) announced a parallel action against the BitClout founder. According to an SEC press release, the defendant perpetrated “a multi-million-dollar fraudulent crypto asset scheme involving a social media platform called BitClout” and its “native” BTCLT token. Among other things, the SEC press release notes the defendant “raised more than $257 million from unregistered offers and sales of BTCLT,” “spent more than $7 million of investor funds on personal expenditures,” and took actions to “create the illusion that the project was autonomous when he was actually behind the project.”

In a notable foreign enforcement action, the UK’s Financial Conduct Authority (FCA) announced a £3,503,546 fine imposed on an affiliate of a major U.S. cryptocurrency exchange for anti-money laundering violations. A press release noted this was the first FCA enforcement action taken based on its powers under the Electronic Money Regulations 2011.

<a href="https://www.justice.gov/usao-sdny/pr/founder-bitclout-digital-asset-charged-fraud-connection-sale-bitclout-tokens" target="_blank" rel="noreferrer noopener">Founder Of “BitClout” Digital Asset Charged With Fraud In Connection With Sale Of “BitClout” Tokens</a>

<a href="https://www.sec.gov/newsroom/press-releases/2024-91" target="_blank" rel="noreferrer noopener">SEC Charges Nader Al-Naji with Fraud and Unregistered Offering of Crypto Asset Securities</a>

<a href="https://www.fca.org.uk/news/press-releases/fca-first-enforcement-action-against-firm-enabling-cryptoasset-trading" target="_blank" rel="noreferrer noopener">FCA takes first enforcement action against firm enabling cryptoasset trading</a>

Reports Cite Ongoing Threat of Crypto Hacks

New reports provide detail on crypto hacks in 2024. According to one report, $266 million in cryptocurrency was lost in 16 attacks in July. Of the $266 million, $230 million is attributable to the hack of Indian cryptocurrency exchange WazirX. Another report noted that over 70 percent of funds lost to crypto hacks are stolen from centralized exchanges. The report also found that hacks of smart contracts are on the rise.

<a href="https://cointelegraph.com/news/july-2024-crypto-hacks-analysis" target="_blank" rel="noreferrer noopener">July crypto hacks total $266M, WazirX leads losses</a>

<a href="https://cointelegraph.com/news/cefi-hacks-2024-cyvers-ai-security" target="_blank" rel="noreferrer noopener">Over 70% of hacked funds are lost to CeFi entities — Cyvers</a>

Weekly Blockchain Blog – August 5, 2024

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